Karnataka High Court
R. Balaji Singh vs Hindustan Machine Tools Limited, Watch ... on 9 June, 1999
Equivalent citations: ILR1999KAR3725, 2000(1)KARLJ447
Author: R. V. Raveendran
Bench: R.V. Raveendran, S.R. Venkatesha Murthy
ORDER R. V. Raveendran, J.
1. The appellant was an employee of the first respondent. He resigned from service on 31-1-1989. In regard to certain claims and demands of the workmen, there were series of negotiations resulting in an agreement relating to revision of wages and other issues on 5-5-1989 (Annexure-B). Thereafter conciliation proceedings were initiated and after further discussions, a settlement was arrived at under conciliation proceedings as per memorandum of settlement under Sections 12(3) and 18(3) of the Industrial Disputes Act, 1947 ('Act' for short), dated 7-7-1989 (Annexure-I). Under the said conciliation settlement, the pay scales were revised with retrospective effect from 1-1-1987.
2. Clause 6 read with Annexure-I to the settlement agreement dated 7-7-1989 contained the new wage structure effective from 1-1-1987. Clause 9 (corresponding to Clause 10 of the Agreement dated 5-5-1989) provided that all workmen who were on the rolls of the company as on 1-1-1987 and who continued to be on the rolls on the date of signing of the settlement, will be entitled to a lumpsum payment of Rs. 1,600/- at the rate of Rs. 100/- per month for the period 1-1-1987 to 30-4-1988. Clause 10.1 (corresponding to Clause 11.1 of the Agreement dated 5-5-1989) provided that in addition to the lumpsum payment, workmen will be eligible to receive payments on account of differences in incremental rates and fixation in the revised scales with effect from 1-1-1987 to 30-4-1988. Clause 10.3 (corresponding to Clause 11.3 of the agreement dated 5-5-1989) provided that workmen who superannuated/voluntarily retired or died while in service between 1-1-1987 and the date of signing the settlement will be eligible for arrears of wages proportionately.
3. The appellant who resigned on 31-1-1989, sought extension of the benefits under the said settlement, by requesting for payment of arrears for the period 1-1-1987 to 31-1-1989. The said request was rejected by the Management by letter dated 28-1-1992 (Annexure-D), on the ground that he was not entitled to such relief under the terms of the settlement dated 7-7-1989. Being aggrieved, the appellant filed W.P. No. 2528 of 1993 for the following reliefs.-
(a) For a declaration that Clause 10 of the settlement dated 5-5-1989 (corresponding to Clause 9 of the settlement dated 7-7-1989) was illegal and violative of Articles 14, 16 and 21 of the Constitution;
(b) For quashing the communication dated 28-1-1992 (Annexure-D wrongly described as Annexure-E in the prayer) rejecting the appellant's request for benefits under the said settlement, as illegal;
(c) For a direction to the respondents to extend the benefit of settlement dated 5-5-1989 to him and for a further direction to pay the interim relief of Rs. 4,080/- which had been deducted from his terminal benefits; and for consequential benefits.
4. The learned Single Judge who heard the matter dismissed the petition by order dated 5-12-1996, R. Balaji Singh v HMT Limited, Bangalore and Another . He held that the appellant cannot challenge the settlement or any provision thereof- He also held that under the terms of the settlement, the appellant is not entitled to any benefit, as the appellant had resigned from service and therefore did not fall under the category of persons who were superannuated or voluntarily retired from service. Feeling aggrieved, the appellant has filed this appeal.
5. The learned Counsel for the appellant submitted that the appellant did not want to challenge the validity of any provision of the settlement that had been reached, even though one of the prayers in the writ petition was to that effect. He submitted that on a proper interpretation of the settlement, the appellant should be held to be entitled to the benefit under Clause 10.3, that is for payment of arrears of wages for the period 1-1-1987 to date of his resignation. It is contended the appellant who resigned, would fall under the category of persons who voluntarily retired and, therefore, he would be eligible for payment of arrears of wages. He next submitted that as the appellant had served the company between 1-1-1987 and 31-1-1989 and the settlement provided for revision of pay scales with effect from 1-1-1987, the benefit of the revised pay scales cannot be denied to him and denial thereof would amount to discrimination and violation of the principle of equal pay for equal work.
6. These aspects have been considered in detail by the learned Single Judge. He has held that an employee who resigns from the service of the employer cannot be equated to an employee who retires after putting in the required length of service and they formed distinct and different groups and the question of discrimination between the two groups does not arise.
7. Two questions therefore arise for consideration (i) whether the resignation by the appellant can be considered as voluntary retirement for the purpose of Clause 10.3 of the conciliation settlement dated 7-7-1989; (ii) whether denial of the difference in salary on the basis of revised scales of pay, for the period 1-1-1987 to date of resignation, while paying such difference to persons who were superannuated or who voluntarily retired, amounted to discrimination violative of Articles 14 and 16 of the Constitution.
Question No. (i)
8. In service jurisprudences the words superannuation, voluntary retirement, compulsory retirement and resignation have clear and different connotations. Superannuation is cessation of the service on attaining the age of retirement and is neither an act of the employee, nor an act of the employer. Compulsory retirement is an act of the employer. Voluntary retirement and resignation are both voluntary acts on the part of the employee, to leave service. The distinction between superannuation/voluntary retirement on the one hand and resignation on the other, is also well-recognised. While resignation and voluntary retirement are both voluntary acts, resignation can be at any time while voluntary retirement, is after the prescribed period of qualifying service. While an employee who voluntarily retires gets all the retirement benefits, a person who resigns (that is voluntarily leaving the service without putting in the minimum qualifying service) will not get retirement benefits. Retirement implies putting in the required minimum service and brings in the element of 'loyalty'. Resignation implies moving to 'pastures new and green'. Voluntary retirement is always with the permission of the employer. Resignation can be without permission or notice. It is no doubt true that a resignation, after completing the period of qualifying service and with the concurrence or acceptance of the employer, will be a voluntary retirement.
9. While negotiating and arriving at a settlement, the Management and the Unions have consciously extended the benefit of arrears of wages from 1-1-1987 only to those who were in service at the time of entering into the settlement and those who retired on account of the superannuation or voluntary retirement, or those who died while in service. Persons who resigned from service were deliberately kept out and were not included in the category of persons who were entitled for the arrears of wages under Clause 10.3.
10. Learned Counsel for appellant contended that resignation, when accepted by the employer is no different from 'voluntary retirement' and relied on the decision of the Supreme Court in M/s. J.K. Cotton Spinning and Weaving Mills Company Limited, Kanpur v State of Uttar Pradesk and Others', wherein it is observed that when an employee voluntarily tenders resignation, such a situation would be covered by the expression 'voluntary retirement'. The question considered by the Supreme Court was whether resignation, when accepted by the employer, is a termination amounting to 'retrenchment' under Section 2(s) of the Uttar Pradesh Industrial Disputes Act. 1947 (corresponding to Section 2(00) of Industrial Disputes Act, 1947), rendering the employer liable to pay compensation to the employee under Section 6-D of the Uttar Pradesh Act (corresponding to Section 25-F of the Central Act). In that context the Supreme Court, held that resignation was a 'voluntary retirement' whereby the employee voluntarily gave up his job and therefore it was excluded from the definition of 'retrenchment' and the employer was under no obligation to comply with Section 6-D (corresponding to Section 25F of the Central Act). The Supreme Court considered the matter with reference to 'retrenchment', that is whether it was an act of termination by employer or whether it was an act of termination by employee voluntarily giving up his employment. Hence the said decision is of no assistance to appellant. The first question is therefore answered in the negative.
Question No. (ii)
11. The appellant who has resigned from the service of the first respondent and who thus voluntarily left the service on 31-1-1989 cannot challenge the validity of the settlement that has been reached on 5-5-1989 and 7-7-1989 between the employer and the Union. Section 18(3)(d) of the Act makes it clear that a settlement arrived at in the course of conciliation proceedings under the Act shall be binding on all persons (workmen) who were employed in the establishment to which the dispute relates on the date of the dispute, and all persons who subsequently become employed in the establishment. Neither a person who was in employment on the date of dispute but who left the service before the settlement, nor a person who was not in employment on the date of dispute but subsequently becomes employed can challenge the conciliation settlement, as not binding on him. In Barauni Refinery Pragatisheel Shramik Parishad v Indian Oil Corporation Limited and Others, the Supreme Court observed thus, with reference to a settlement arrived at in the course of conciliation:
"It may be seen on a plain reading of sub-sections (1) and (3) of Section 18 that settlements are divided into two categories, namely (i) those arrived at outside the conciliation proceedings and (ii) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement but the settlement belonging to the second category has extended application since it is binding on all parties to the industrial dispute, to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. Therefore, a settlement arrived at in the course of conciliation proceedings with a recognised majority union will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. To that extent it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement. There is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the union signing the settlement hut also on others. That is why a settlement arrived at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority".
Hence the appellant cannot challenge the conciliation settlement either on the ground of arbitrariness or discrimination. Further a complaint of arbitrariness or discrimination can be made in regard to an unilateral act of an Authority and not in regard to a bilateral act like an Agreement between parties or a conciliation settlement, which is the product of negotiations between parties.
12. Let us next examine whether there is any discrimination at all. The learned Counsel for the appellant contends that salary, or arrears of salary are paid to persons who have worked for a specific period. When the pay is increased retrospectively, all persons who have worked during the period for which the increase is given effect, will become entitled to the difference in pay; and a subsequent cessation of employment for different reasons, cannot lead to different types of payment for the same period of work. He points out that while a person who is permitted to voluntarily retire on 31-1-1989 would get the arrears for the period 1-1-1987 and 31-1-1989, a person who resigned on 31-1-1989 is denied the arrears for the very same period 1-1-1987 and 31-1-1989, even though both were in the same cadre and did the same work. He would submit that the manner of cessation from work is an irrelevant criterion to determine the entitlement to the salary or arrears of salary for the period of work. Reliance is placed on D.S. Nakara v Union of India, wherein the Supreme Court held that classification in revised pension formula between pensioners, on the basis of a specified date of retirement was arbitrary and violative of Article 14. It is contended that all persons who worked during any given period formed a homogeneous class and having regard to the principle 'equal pay for equal work', for the purpose of payment of salary for such period of service (as contrasted from retirement benefits), there cannot be any classification on the basis of mode of subsequent cessation from service; and that such classification, if made, will be on the basis of a criterion which has no discernible rational principle.
13.. When the petitioner left the service, his salary upto date of his leaving the service was paid to him. There was no arrears. Nothing was due under the contract of employment. By a subsequent settlement, revised scales of pay were made applicable, with retrospective effect from 1-7-1987 to certain classes of employees, but not to employees who had resigned before the date of settlement. The question is whether that amounts to discrimination, assuming that the settlement could be challenged on that ground; or alternatively whether the petitioner can contend that the benefit of the revised scales of pay having been made applicable retrospectively to all employees who continue in service and employees who retired or died, with effect from 1-1-1987, it should also be extended to him for the service rendered from 1-1-1987 to date of resignation.
14. Persons who are in service, persons who have ceased to be in service either on account of superannuation or on account of voluntary retirement, with the consent of the employer, persons who died while in service, and persons who voluntarily leave the service by resignation, form four separate and distinct categories. There is nothing wrong in the employer extending the benefit of revised scales of pay with retrospective effect only to those who fall under the category of loyal and committed workers (persons in first three categories) and not extending it to those who left the service in search of greener pastures, i.e., those who resign to better their employment prospects or for other personal reasons. The distinction made is reasonable. It has a rationale nexus to the object sought to be achieved, that is to reward and benefit those who are loyal to the employer and strive for the betterment of the company. On the other hand, persons who resign from the company, normally to take up more lucrative or advantageous employment or for other personal reasons, have virtually deserted the company and therefore the employer can say that they will not be entitled to any additional benefits, which are given to the others. Hence, the second question is also answered in the negative.
15. We do not therefore find any reason to interfere with the decision of the learned Single Judge, The appeal is, therefore, rejected.